Rupee Hits Record Low Amid Global Tensions and Rising Oil Prices
Rupee Declines to Historic Low
Mumbai: The Indian Rupee experienced a significant drop of 39 paise, closing at a record low of 95.23 against the US dollar on Monday. This decline is attributed to escalating tensions in the Middle East, which are contributing to fluctuations in global markets, maintaining high oil prices, and raising concerns about inflation and economic downturn.
Forex analysts noted that Brent crude oil prices, currently around USD 110 per barrel, are exerting pressure on oil-dependent economies such as India.
In the interbank foreign exchange market, the rupee began trading at 94.95 against the dollar but lost value throughout the day, ultimately closing at its lowest point ever at 95.23, marking a decrease of 39 paise from the previous close.
Previously, on Thursday, the rupee had settled at 94.84 against the US currency, with its earlier lowest closing recorded at 94.88 on April 29.
The stock and currency markets were closed on Friday in observance of Maharashtra Day.
According to Dilip Parmar, Senior Research Analyst at HDFC Securities, "The Indian rupee has reached a historic low as the dollar strengthens and crude oil prices remain elevated. The ongoing rise in oil prices, coupled with foreign fund withdrawals, is significantly impacting India's trade balance and overall economy."
He further added, "Continued demand for dollars is likely to keep pressure on the rupee in the near term, pushing the USD/INR rate higher towards 95.35 and 95.70 levels."
The dollar index, which measures the dollar's strength against a basket of six currencies, was reported at 98.26, reflecting a 0.11 percent increase.
Brent crude, the global oil benchmark, was trading up by 1.37 percent at USD 109.65 per barrel in futures trading.
Investors are closely monitoring the vote counting for the West Bengal state elections, as noted by IFA Global in a research report. They mentioned that a BJP victory could positively influence domestic assets, although the effect may be short-lived due to ongoing global geopolitical issues affecting supply chains and industries.
In the domestic equity market, the Sensex surged by 355.90 points, closing at 77,269.40, while the Nifty index rose by 121.75 points to reach 24,119.30.
Foreign Institutional Investors (FIIs) bought equities worth Rs 2,835.62 crore on Monday, according to exchange data.
Expenditure Secretary V Vualnam indicated on Friday that the upcoming quarters and the next year may present numerous "stress points." He acknowledged the reality of fiscal stress but emphasized that capital expenditure would remain a priority to maintain budgeted levels, as stated during the ICPP Growth Conference hosted by Ashoka University.